Nikitina D. A., Mudrenko A. A., Duchinskaya N. I.

Oles Honchar Dnipropetrovsk National University


Inflation is one of the most urgent problems of the modern economic development in many countries, and Ukraine – is no exception, in fact we can say that it is one of the serious tasks in the agenda of the government regulation. It devalues ​​ labor results, destroys businesses’ and individuals’ savings, prevents long-term investment and economic growth. High inflation destroys the monetary system, provokes national capital flight abroad, undermines a possibility to finance the state budget, slackens national currency and Inflation is the most effective means of redistribution of national wealth – from the poorest to the richest population.

In countries with advanced economy inflation can be seen as an integral part of the economic mechanism. However, it does not represent a serious threat because methods of restriction and regulation of inflation processes are efficient and widely used. In addition, the presence of a small rate of inflation is seen by economists as a motivational factor of economic development, but it applies only to low rate of inflation. Price instability debilitates most people not only only in economic but also psychological sense, creates enormous social tension in a society, thereby strengthening its social differentiation.

In addition, the stability of a monetary unit serves as an important prerequisite for economic development of any country. Creating these conditions is especially important for Ukraine as the consumer price index (CPI) as the main indicator of inflation in Ukraine varies considerably and tends to accelerate growth. Thus, from 2003 to 2011 its value changed in the range from 108.2% to 122.3%, while in the European Union, where Ukraine is going to enter, the inflation rate is usually less than 103%. Such high and volatile inflation rates are difficult to predict in a qualitative way, as evidenced by constant rejection of the state predictions of actual inflation. All these factors significantly complicate the planning and implementation of any economic activity, undermine public confidence in government and raise high inflation expectations. Therefore there is an objective need to improve planning effectiveness and control of inflation process in Ukraine.

Inflation is an extremely difficult socio-economic phenomenon that manifests itself in long and rapid depreciation of money due to excessive growth of supply in circulation. The main form of inflation is sustained and rapid growth in prices, additional forms are a tedious shortage of goods and services and the devaluation of the national currency.

Inflation – a long process that has several stages, which vary not only in the level of rise in prices, but also its impact on the economy. In the first stage of money supply growth outpaces price increases, which is small (up to 5% per year) or completely absent. It has a positive effect on economic development. In the next stage the rate of growth of rise in prices accelerates and approaches the rate of money supply growth and may even exceed it. Such inflation is called open or moderate and ranges from 5 to 20% per year. It can have both positive and negative impact on economic development. After that the stages of galloping inflation (20-50% per year) and hyperinflation (over 100% per year) start. Each of these types of inflation brings devastation to the economy and social sphere.

According to the official statistics in Ukraine moderate inflation is constantly observed, with the exception in 2008 when it moved to level of galloping, the causes of it first of all were global financial crisis and political instability in the country. So we have to introduce the strategic objectives, not only I relation to the anti-crisis policy, but also to anti-inflationary measures, a plan developed by representatives of various political forces and economic trends that would stand as a power of legislative act all the political forces in power would obey it.

Provided that inflation process is controlled in Ukraine, it is advisable to support production. After all, manufacturing creates conditions for the commodity money provision and an opportunity to actually eliminate inflationary factors. Government actions are necessary to improve industry and create favorable conditions for capitalization.

In addition we should understand that the implementation of only some anti-inflation measures will lead to the same effect as "face-lift".